12-06 Ordinance RECORD OF ORDINANCES
Dayton Lega] Blank, Inc. Form No. 30043
12-06
Ordinance No. Passed . 20
AN ORDINANCE AUTHORIZING THE PROVISION
OF CERTAIN INCENTIVES FOR PURPOSES OF
ENCOURAGING MEDCO HEALTH SOLUTIONS TO
RETAIN ITS OPERATIONS WITHIN THE CITY,
AND AUTHORIZING THE EXECUTION OF AN
ECONOMIC DEVELOPMENT AGREEMENT.
WHEREAS, consistent with its Economic Development Strategy (the "Strategy")
approved by Dublin City Council Resolution No. 07-94 adopted on June 20, 1994, and
the updated strategy approved by Dublin City Council Resolution No. 30-04 adopted
on July 6, 2004, the City desires to encourage commercial office and retail
development and provide for the creation of employment opportunities within the City;
and
WHEREAS, Medco Health Solutions ("Medco is desirous of retaining its operations
and workforce within the City in consideration for the provision by the City of
economic development incentives; and
WHEREAS, this Council has determined to offer economic development incentives,
the terms of which are set forth in a substantially final form of Economic Development
Agreement presently on file in the office of the Clerk of Council, to induce Medco to
retain its operations and workforce within the City, and to improve the economic
welfare of the people of the State of Ohio and the City, all as authorized in Article VIII,
Section 13 of the Ohio Constitution; and
WHEREAS, this Council finds that it is in the best interest of the City to provide those
economic development incentives to induce Medco to retain its operations and
workforce within the City and to provide for the execution and delivery of that
Economic Development Agreement with Kinetics;
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of Dublin,
Franklin, Union and Delaware Counties, State of Ohio, of the elected
members concurring, that:
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Section 1. The Economic Development Agreement by and between the City and
Medco, in the form presently on file with the Clerk of Council, providing for, among
other things, the provision of incentives to Medco in consideration for Medco's
agreement to retain its operations and workforce within the City, is hereby approved
and authorized with changes therein not inconsistent with this Ordinance and not i
substantially adverse to this City and which shall be approved by the City Manager and
Director of Finance. The City Manager and Director of Finance, for and in the name of
this City, are hereby authorized to execute that Economic Development Agreement,
provided further that the approval of changes thereto by those officials, and their
character as not being substantially adverse to the City, shall be evidenced conclusively
by their execution thereof. This Council further authorizes the City Manager and the
Director of Finance, for and in the name of the City, to execute any amendments to the
Economic Development Agreement, which amendments are not inconsistent with this
Ordinance and not substantially adverse to this City.
Section 2. This Council further hereby authorizes and directs the City Manager, the
Clerk of Council, the Director of Law, the Director of Finance, or other appropriate
officers of the City to prepare and sign all agreements and instruments and to take any
other actions as maybe appropriate to implement this Ordinance.
RECORD OF ORDINANCES
Dayton Legal Blank, Inc. Form No. 30043
Ordinance No. 12-06 Passed Page ? 20
Section 3. This Council finds and determines that all formal actions of this Council
concerning and relating to the passage of this Ordinance were taken in an open meeting
of this Council and that all deliberations of this Council that resulted in those formal
actions were in meetings open to the public in compliance with the law.
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Section 4. This Ordinance shall be in full force and effect on the earliest date
permitted by law.
Signed:
Mayor -Presiding Officer
Attest:
Clerk of Council
Passed: IGZYG~. ~O , 2006
Effective: ~~~wc- ~ 7 , 2006
I hereby certify that copies of this
Ordinance/Resolution were posted in the
City of Dublin in accordance with Section
I 731.25 of the Ohio Revised Code.
I
D ty Clerk of Council, Dublin, Ohio
Economic Development
5800 Shier Rings Road, Dublin., Ohio 43016-1.236
C1T1' 4F Dt?BLIN phone: 614-410-4600 • Fax: 614-761-6506
Memo
To: Members of Dublin City Council
From: Jane S. Brautigam, City Manager~a.,,~,.5. a,,,,~j
Date: March 1, 2006 ~ ~
Initiated By: Colleen M. Gilger, Acting Director of Economic Development
Re: Ordinance 12-06 -Economic Development Agreement with Medco Health Solutions
Summary:
Staff has been working with Medco since May 2005 as the company's lease was soon to expire at 5151 Blazer
Parkway, and officials were looking at alternate leased space in both Hilliard and Columbus. We hoped to retain
the 720 jobs and any additional workforce growth within Dublin. The company also planned to consolidate its call
center into either the Dublin space, or relocate it elsewhere in Central Ohio.
Economic Development staffpresented Medco with a retention proposal tied to a Dublin lease extension and the
consolidation of the call center to Dublin. The proposal calls for a Retention and Technology Grant of $120,000
that will be used for space renovation and technology upgrades to the facility, and afour-year, 20% withholding
equivalent should Medco meet predetermined payroll growth projections.
Over the five-year term, Medco is capped at receiving a total of $600,000 should they meet all annual targets,
while the City would retain approximately $3.4 million in income tax tied to 720 jobs.
Recommendation:
Staff recommends the Economic Development Agreement and Ordinance No. 12-06 be approved by City Council
on March 20, 2006.
ECONOMIC DEVELOPMENT AGREEMENT
THIS ECONOMIC DEVELOPMENT AGREEMEI~1"I' (the "Agreement") i5 made and entered into
this day of , 2006, by and between the CrTY of DUBLIN, OHIO {the "City"), a
municipal corporation duly organized and validly existing under the Constitution and the laws of
the State of Ohio (the "State") and its Charter, and MEDC:O HEALTH SOLUTIONS ("Medco"), an
Ohio limited liability company with its offices located in Dublin, Ohio, under the circumstances
summarized in the following recitals.
RECTI'ALS:
WHEREAS, consistent with its Economic Development Strategy (the "Strategy") approved
by Dublin City Council Resolution No. 07-94 adopted on June 20, 1994, and the updated strategy
approved by Dublin City Council Resolution No. 30-04 adopted on July 6, 2004, the City desires
to encourage commercial office and retail development and provide for the retention and creation
of employment opportunities within the City; and
WI-tEttEAS, based on the results of Medco's recent comprehensive examination of
workforce needs, and induced by and in reliance on the economic development incentives provided
in this Agreement, Medco is desirous of retaining its existing workforce of approximately 720
employees within the City; and
WHEREAS, pursuant to Ordinance No. 12-06 passed , 2006 (the "Ordinance"), the
City has determined to offer economic development incentives described herein to induce Medco
to retain its workforce within the City to improve the economic welfare of the people of the State
of Ohio and the City, all as authorized in Article V IlI, Section 13 of the Ohio Constitution; and
WHEREAS, the City and Medco have determined to enter into this Agreement to provide
these incentives to induce Medco to retain its operations within the City;
Now T~FORE, the City and Medco covenant ogee and obligate themselves as follows:
Section 1. Medco A~-eement to Retain Current Workforce at the Medco Dublin
Overations. Medco presently employs approximately 720 employees within the City of Dublin.
The aggregate annual payroll of those employees is approximately $30,000,000. For consideration
of the economic development incentives to be provided by the City herein, Medco agrees that it will
retain at least 720 employees in the City.
Once a lease renewal or extension of such lease at the Medco Facility is completed, Medco
agrees to provide written evidence of such renewal or extension lease agreement obligating Medco
through at least December 31, 2010, to the City which shall be in a form which is reasonably
acceptable to the City. Medco agrees that the City shall not be required to make any payments
which may otherwise be required by this Agreement until such written evidence of such new or
extended lease has been delivered to and accepted by the City.
Section 2. City Aga-eement to Provide Incentives.
{a) General. In consideration for Medco's agreement to retain its workforce and
associated payroll within the City, the City agrees to provide economic development incentives to
Medco in accordance with this Section.
(b) Retention and Technology Grant. Medco will update equipment at the Medco
Facility to further support its operations within the City. In consideration of that agreement to
upgrade such equipment and retain it workforce within the City, the City agrees to provide a
grant in the amount of $120,000 to Medco to be used for the purpose of upgrading the facility
and equipment at the Medco Facility. The City agrees that it will remit payment in the amount
of the grant no later than thirty (30) days following the execution of this Agreement.
(c) Workforce Retention Incentive.
(i} Calculation of Actual Withholdinr~s. On or before March 15 of each of the
years 2007 thru 2010 the City shall determine whether the actual payroll withholding
taxes collected during the preceding calendar year by the City from all Employees (the
"Actual Withholdings") meet or exceed the Target Withholdings for that preceding
calendar year, all in accordance with the schedule set forth below. Far purposes of this
Section 2, "Employees" shall include only the following:
(A) All individuals employed by Medco working at any Medco facility
located within the City, or working full-time from their residences located within the
City ("Medco Employees"); and
{B) All independent contractors {excluding construction contractors
and tradesmen}, consultants and temporary employees working at any Medco
facility located within the City, or working full-time from their residences located
within the City (each a "Contract Employee").
(ii) Information Relating to Medco Employees. Medco agrees that, in
accordance with the Dublin City Code, the annual payroll reconciliation and related W-2
forms relating to Medco Employees will be provided to the City prior to February 28 of
each calendar year.
(d} Payments to Medco. If the actual payroll withholding taxes collected during the
preceding calendar year by the City from all employees, net of refunds paid to employees by the
City ("Actual Withholdings"), meet or exceed the Target Withholdings for the preceding calendar
year, the City shall, on or before April 15 of the then current calendar year, pay to Medco, solely
from nontax revenues, an amount equal to the product of (A) an amount equal to the Actual
Withholdings multiplied by (B) the Incentive Factor (as defined below) {"Incentive Payment").
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(e) Withholdings and Incentive Payments. With respect to the Actual Withholdings
collected during each of the calendar years 2006 through 2009, inclusive, the Incentive Factor
shall be twenty percent (20%). The Target Withholdings for each of the calendar years 2006
through 2009 shall be:
Calendar Year Target Withholdings Maximum Pavment
2006 $664,001 $120,000 paid in 2007
2007 $677,281 $120,000 paid in 2008
2008 $690,827 $120,000 paid in 2009
2008 $704,643 $120,000 paid in 2010
The payments provided for in this Section 2 shall be made by the City to Medco by
electronic funds transfer or by such other manner as is mutually agreed to by the City and Medco.
Performance incentive maximum payment caps are set as indicated in the table above in Section
2(e). The total maximum payment cap associated with this Agreement {including both the
Technology Grant payment and four annual performance payments) is $600,000.
(fj Additional Incentives. The City and Medco agree that Medco will be entitled to an
Incentive Payment with the Incentive Factor equal to thirty percent (30%) in calendar year 2010
(to be paid in 2011), if by December 31, 2010, Medco provides the City with evidence of
renewal or extension of a lease of the Medco Facility obligating Medco through at least
December 31, 2015. This "additional incentive" will be capped at $120,000.
(g) Forfeiture of Incentive Payment(s). Medco agrees and acknowledges that Incentive
Payments provided for in Section 2(d) are being made by the City to Medco in consideration for
Medco's agreement to retain its workforce within the City. Medco further ogees that if the Target
Withholding is not met for any given year, as set forth in Section 2(d) above, the City shall not be
obligated to make any incentive payment to Medco for the year in which the Target Withholding
was not met. Failure to meet the Target Withholding in any one incentive year does not prohibit
Medco from receiving an Incentive Payment for any subsequent year in which the Target
Withholding is met.
(h) City's Obligaation to Make PaXrrients Not Debt= Payments Limited toNon-tax Revenues.
Notwithstanding anything to the contrary herein, the obligations of the Crty pursuant to this
Agreement shall not be a general obligation debt or bonded indebtedness, or a pledge of the
general credit or taxes levied by the City, and Medco shall have no right to have excises or taxes
levied by the City, the State or any other political subdivision of the State for the performance of
any obligations of the City herein. Consistent with Section 13 of Article VIII, Ohio Constitution,
any payments or advances required to be made by the City pursuant to this Section 2 shall be
payable solely from the City's non-tax revenues. Further, since Ohio law limits the City to
appropriating monies for such expenditures only on an annual basis, the obligation of the City to
make payments pursuant to this Section 2 shall be subject to annual appropriations by the City
Council and certification by the Director of Finance of the City as to the availability of such non-
tax revenues.
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(i) Applicable City Payroll Tax Rate. For purposes of calculating the Actual Withholdings
in each calendar year under this Section 2, the City's payroll tax rate shall be assumed to be two
percent (2%).
Section 3. Miscellaneous.
(a) Notices. Except as otherwise specifically set forth in this Agreement, all notices,
demands, requests, consents or approvals given, required or permitted to be given hereunder shall be
in writing and shall be deemed sufficiently given if actually received or ifhand-delivered or sent by
recognized, overnight delivery service or by certified mail, postage prepaid and return receipt
requested, addressed to the other party at the address set forth in this Agreement or any addendum
to or counterpart of this Agreement, or to such other address as the recipient shall have previously
notified the sender of in writing, and shall be deemed received upon actual receipt, unless sent by
certified mail, in which event such notice shall be deemed to have been received when the return
receipt is signed or refused Far purposes of this agreement, notices shall be addressed ta:
(i) the City at:
City of Dublin, Ohio
5800 Shier Rings Road
Dublin, Ohio 43016-7295
Attention: Economic Development Director
(ii) Medco at:
Medco Health Solutions
100 Parsons Pond Drive
Franklin Lakes, New Jersey 07417
Attention: Director, Corporate Real Estate
The parties, by notice given hereunder, may designate any further or different addresses to which
subsequent notices; certificates, requests or other communications shall be sent.
(b) Extent of Provisions; No Personal Liability. All rights, remedies, representations,
warranties, covenants, agreements and obligations of the City under this Agreement shall be
effective to the extent author7zed and permitted by applicable law. No representation, warranty,
covenant, agreement, obligation or stipulation contained in this Agreement shall be deemed to
constitute a representation, warranty, covenant, agreement, obligation or stipulation of any present
or future trustee, member, officer, agent or employee of the City or Medco in other than his o~- her
official capacity. No official executing or approving the City's or Medco's participation in this
Agreement shall be liable personally under this Agreement or be subject to any personal liability or
accountability by reason of the issuance thereof.
(c) Successors. This Agreement shall be binding upon and inure to the benefit of Medco
and its successors and assigns.
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(d) Recitals. The City and Medco acknowledge and agree that the facts and circur~tances
as descnbed in the Recitals hereto are an integal part of this Ageement and as such are
incoc~pcxated herein by reference.
(e) Amendments. This Ageement may only be amended by written instrument executed
by the City and Medco.
(f) Executed Counterparts. This Ageement may be executed in several counterparts, each
of which shall be regarded as an original and all of which shall constitute but one and the same
ageement. It shall not be necessary in proving this Ageement to produce or account for more than
one of those counterparts.
{g) Severability. In case any section or provision of this Ageement, or any covenant,
ageement, obligation or action, or part thereof, made, assumed, entered into or taken, or any
application thereof, is held to be illegal or invalid for any reason,
(i) that illegality or invalidity shall not affect the remainder hereof or thereof, any
other section or provision hereof, or any other covenant, ageement, obligation or action, or
part thereof, made, assumed, entered into or taken, all of which shall be construed and
enforced as if the illegal or invalid portion were not contained herein or therein,
(ii) the illegality or invalidity of any application hereof ~ thereof shall not affect
any legal and valid application hereof or thereof, and
(iii) each section, provision, covenant, ageement, obligation or action, or part
thereof, shall be deemed to be effective, operative, made, assumed, entered into or taken in
the manner and to the full extent permitted by law.
(h} lions. The captions and headings in this Ageement are for convenience only and in
no way define, limit or describe the scope or intent of any provisions or sections of this Ageement.
(i) Governing Law and Choice of Forum. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio or applicable federal law. All claims,
counterclaims, disputes and other matters in question between the City, its agents and employees,
and Medco, its employees and agents, arising out of or relating to this Agreement or its breach will
be decided in a court of competent jurisdiction within Franklin County, Ohio.
(j) Survival of Representations and Warranties. All representations and warranties of
Medco and the City in this Agreement shall survive the execution and delivery of this Ageement.
(k) Notwithstanding any clause or provision of this Ageement to the contrary, in no
event shall City or Medco be liable to each other for punitive, special, consequential, or indirect
damages of any type and regardless of whether such damages are claimed under contract, tort
(including negligence and strict liability) or any other theory of law.
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Irt WrrNESS WFIERF,OF, the City and Medco have caused this Ageement to be executed in
their respective names by their duly authorized representatives, all as of the date first written above.
CITY OF DUBLIN, OHIO
By:
Printed: Jane Brautigam
Title: City Manager
Approved as to Form:
By:
Printed: Stephen J. Smith
Title: Director of Law
MEDCO HEALTH SOLUTIONS
By:
Printed:
Title:
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FISCAL OFFICER'S CERTIFICATE
T'he undersigned, Director of Finance of the City under the foregoing Agreement, certifies
hereby that the moneys required to meet the obligations of the City under the foregoing Agreement
have been appropriated lawfully for that purpose, and are in the Treasury of the City or in the
process of collection to the credit of an appropriate fund, free from any previous encumbrances.
This Certificate is given in compliance with Sections 5705.41 and 5705.44, Ohio Revised Code.
Dated: , 2006
Marsha I. Grigsby
Deputy City Manager/Director of Finance
City of Dublin, Ohio
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